If a 1 Percent Increase in the Price of X

question 25

Multiple Choice

If a 1 percent increase in the price of X increases the quantity demanded of Y by 2 percent,then X and Y are

• A) complements and the cross elasticity of demand equals 2.
• B) substitutes and the cross elasticity of demand equals 1/2.
• C) substitutes and the cross elasticity of demand equals 2.
• D) complements and the income elasticity of demand equals 2.
• E) normal goods and the income elasticity of demand of each equals 2.